NCERT Notes Class 11 Indian Economic Development Chapter 6: Employment: Growth, Informalisation and Other Issues (Free PDF)

Employment is crucial for economic development, as it contributes to national income, provides a sense of self-worth, and supports dependents. This chapter explores concepts like workers, employment participation, self-employment versus hired work, shifts in employment structure, informalisation trends, unemployment types and causes, and government initiatives for job generation. These notes summarise key concepts from Chapter 6 of the NCERT textbook Indian Economic Development for effective revision. You can also download the free PDF for quick reference.

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Download Free PDF of NCERT Class 11 Indian Economic Development Chapter 6: Employment: Growth, Informalisation and other issues

Introduction

People do a variety of work. Some work on farms, in factories, banks, shops and many other workplaces; yet a few others work at home. Work at home includes not only traditional work like weaving, lace making or a variety of handicrafts, but also modern jobs like programming work in the IT industry. Earlier factory work meant working in factories located in cities, whereas now technology has enabled people to produce those factory-based goods at home in villages. During the COVID-19 pandemic in 2020-21, millions of workers delivered their products and services through work-from-home.

Why do people work? 

Work plays an important role in our lives as individuals and as members of society. People work for ’earning’ a living. Some people get, or have, money by inheriting it, not working for it. This does not completely satisfy anybody. Being employed at work gives us a sense of self-worth and enables us to relate meaningfully with others. Every working person is actively contributing to national income and hence, the development of the country by engaging in various economic activities – that is the real meaning of ’earning’ a living. 

We do not work only for ourselves; we also have a sense of accomplishment when we work to meet the requirements of those who are dependent on us. Having recognised the importance of work, Mahatma Gandhi insisted upon education and training through a variety of works, including craft. Studying about working people gives us insights into the quality and nature of employment in a country and helps in understanding and planning our human resources. It helps us to analyse the contribution made by different industries and sectors towards the national income. It also helps us to address many social issues, such as the exploitation of marginalised sections of society, child labour, etc.

Workers and Employment

When a farmer works on fields, he or she produces food grains and raw materials for industries. Cotton becomes cloth in textile mills and in powerlooms. Lorries transport goods from one place to another. We know that the total money value of all such final goods and services produced in a country in a year is called its gross domestic product for that year. 

When we also consider what we pay for our imports and get from our exports, we find that there is a net earning for the country, which may be positive (if we have exported more in value terms than imported) or negative (if imports exceeded exports in value terms) or zero (if exports and imports were of the same value). When we add this earning (plus or minus) from foreign transactions, what we get is called the country’s gross national product for that year.

• Those activities which contribute to the gross national product are called economic activities. All those who are engaged in economic activities, in whatever capacity – high or low, are workers. 
• Even if some of them temporarily abstain from work due to illness, injury or other physical disability, bad weather, festivals, social or religious functions, they are also workers. Workers also include all those who help the main workers in these activities.
• We generally think of only those who are paid by an employer for their work as workers. This is not so. Those who are self-employed are also workers. The nature of employment in India is multifaceted. Some get employment throughout the year; some others get employed for only a few months in a year. 
• During 2017-18, India had about 471 million strong workforce. Since the majority of our people reside in rural areas, the proportion of the workforce residing there is higher. The rural workers constitute about two-thirds of this 471 million. Men form the majority of the workforce in India. About 77 per cent of the workers are men, and the rest are women (men and women include child labourers in their respective sexes). 
• Women workers account for one-fourth of the rural workforce, whereas in urban areas, they are just one-fifth of the workforce. Women carry out work like cooking, fetching water and fuelwood and participate in farm labour. They are not paid wages in cash or in the form of grains; at times, they are not paid at all. For this reason, these women are not categorised as workers. Economists argue that these women should also be called workers.

Participation of People in Employment

Worker-population ratio is an indicator which is used to analyse the employment situation in the country. This ratio is useful in knowing the proportion of the population that is actively contributing to the production of goods and services of a country. 

• If the ratio is higher, it means that the engagement of people is greater; if the ratio for a country is medium or low, it means that a very high proportion of its population is not involved directly in economic activities.
• Population: Population is defined as the total number of people who reside in a particular locality at a particular point in time. If you want to know the worker-population ratio for India, divide the total number of workers in India by the population in India and multiply it by 100. You will get the worker-population ratio for India.
• People in rural areas have limited resources to earn a higher income and participate more in the employment market. Many do not go to schools, colleges and other training institutions. Even if some go, they discontinue in the middle to join the workforce; whereas, in urban areas, a considerable section is able to study in various educational institutions. 
• Urban people have a variety of employment opportunities. They look for the appropriate job to suit their qualifications and skills. In rural areas, people cannot stay at home as their economic condition may not allow them to do so.
• Compared to females, more males are found to be working. The difference in participation rates is very large in urban areas: for every 100 urban females, only about 14 are engaged in some economic activities.
• Many household activities done by women are not recognised as productive work. This narrow definition of work leads to non-recognition of women’s work and, therefore, to the underestimation of the number of women workers in the country. 

Self-Employed and Hired Workers

By knowing the status with which a worker is placed in an enterprise, it may be possible to know one dimension – quality of employment in a country. It also enables us to know the attachment a worker has with his or her job and the authority she or he has over the enterprise and over other co-workers.

Let us take three workers from the construction industry – a cement shop owner, a construction worker and a civil engineer of a construction company. Since the status of each one of them is different from another, they are also called differently. Workers who own and operate an enterprise to earn their livelihood are known as self-employed. Thus, the cement shop owner is self-employed. About 52 per cent workforce in India belongs to this category. The construction workers are known as casual wage labourers; they account for about 25 per cent of India’s workforce. Such labourers are casually engaged in others’ farms and, in return, get remuneration for the work done. Workers like the civil engineer working in the construction company account for 23 per cent of India’s workforce. When a worker is engaged by someone or an enterprise and paid his or her wages on a regular basis, they are known as regular salaried employees.

Casual wage work is the second major source for both men and women, a little more so for the latter (24-27 per cent). When it comes to regular salaried employment, both women and men are found to be more engaged in a greater proportion. Men form 23 per cent, whereas women form 21 per cent. The gap between men and women is very less.

The nature of work in urban areas is different. Obviously, everyone cannot run factories, shops and offices of various types. Moreover, enterprises in urban areas require workers on a regular basis.

Employment in Firms, Factories and Offices

In the course of economic development of a country, labour flows from agriculture and other related activities to industry and services. In this process, workers migrate from rural to urban areas. Eventually, at a much later stage, the industrial sector begins to lose its share of total employment as the service sector enters a period of rapid expansion. This shift can be understood by looking at the distribution of workers by industry. 

• Generally, we divide all economic activities into eight different industrial divisions. They are (i) Agriculture (ii) Mining and Quarrying (iii) Manufacturing (iv) Electricity, Gas and Water Supply (v) Construction (vi) Trade (vii) Transport and Storage and (viii) Services. For simplicity, all the working persons engaged in these divisions can be clubbed into three major sectors viz., (a) primary sector which includes (i) and (ii), (b) secondary sector which includes (iii), (iv) and (v) and (c) service sector which includes divisions (vi), (vii) and (viii). 
• The distribution of the workforce by industrial sectors shows a substantial shift from farm work to non-farm work. In 1972-73, about 74 per cent of the workforce was engaged in the primary sector and in 2011-12, this proportion had declined to about 50 per cent. Secondary and service sectors are showing a promising future for the Indian workforce. You may notice that the shares of these sectors have increased from 11 to 24 per cent and from 15 to 27 per cent, respectively.

Growth and Changing Structure of Employment

During the period 1960–2000, the Gross Domestic Product (GDP) of India grew positively and was higher than the employment growth. However, there was always fluctuation in the growth of GDP, but employment grew at a stable rate. Here are some important points on the changing pattern of employment in India:

• During these years, we also find a widening gap between the growth of GDP and employment. This means that in the Indian economy, without generating employment, we have been able to produce more goods and services. This phenomenon is referred to as jobless growth.
• In the previous 50 years, India’s employment growth has not kept pace with the country’s GDP growth. During the 1950s, GDP expanded at a healthy pace of more than 8%, and it increased at a healthy rate of more than 8% in 2010. 
• In the 1950s, employment generation was 0.39 per cent, and throughout the 1960s and 1990s, it maintained a pretence of development.

Informalisation of the Indian Workforce

One of the objectives of development planning in India, since India’s independence, has been to provide a decent livelihood to its people. It has been envisaged that the industrialisation strategy would bring surplus workers from agriculture to industry with a better standard of living, as in developed countries. We have seen in the preceding section that even after 70 years of planned development, more than half of the Indian workforce depends on farming as the major source of livelihood.

• Economists argue that, over the years, the quality of employment has been deteriorating. Even those who are highly qualified do not have jobs. Even those having jobs do not have a better quality of working life as there is no job security, no social protection like pension, provident fund, gratuity, sick and medical allowances. 
• Many workers do not get fair wages. Thus, people are forced to do whatever jobs are available to them. In other words, there is an increase in the number of people working in the informal sector.
• Those who are working in the formal sector enjoy social security benefits. They earn more than those in the informal sector. 
• Developmental planning envisaged that as the economy grows, more and more workers would become formal sector workers and the proportion of workers engaged in the informal sector would dwindle.
• Economists point out that the reform process initiated in the early 1990s resulted in a decline in the number of workers employed in the formal sector.
• With economic reforms in 1991, there has been a significant rise in the informalisation of workers. Since informal workers face uncertainties of making of living, it is surprising that such a high percentage of the total workforce prefer to be employed in the informal sector.

Unemployment

It is a situation where people who are willing and able to work at the existing wages are not able to find jobs. Scholars say that in India, unemployment exists in open and disguised forms. Generally, it is assumed that the unemployed are those who are registered with employment exchanges. But the majority of our unemployed, especially in rural areas, do not register themselves with such exchanges.

• The rapid growth of the population – Another reason for this is the rise in the population. As a result of this, it is witnessed that the supply of labour is much more than the employment. 
• Lack of financial resources – The expansion of various sectors has been put on hold because of a lack of enough financial resources.

In India, unemployment is found both in rural and urban areas.

• In rural areas, there is seasonal unemployment in which there are few employment opportunities in some months and in some other months, there are no opportunities at all. 
• Also, there is disguised unemployment in which more people are employed than what is actually required. In urban areas, there is educated unemployment, in which educated people do not find jobs.

Government and Employment Generation

Till the 1990s, the employment generation programmes of the government did not meet with much success. But after the introduction of the National Rural Employment Guarantee Act 2005 (now known as the Mahatma Gandhi National Rural Employment Guarantee Act), the government could provide some guaranteed wage employment to the rural unskilled workers. It also launched many schemes like Swarna Jayanti Shahari Rozgar Yojana, Pradhan Mantri Gramodaya Rozgar Yojana, Pradhan Mantri Gram Sadak Yojana, Sampoorna Grameen Rozgar Yojana, etc.

Conclusion

It is clear that unless the process of development leads to improvement in working conditions by enhancing work opportunities, development may not be worth seeking. The challenge of employment is going to become more severe as years roll by. It requires a complete commitment on the part of the government to pursue appropriate policies for employment generation. In this connection, we should realise the need for encouraging investment in employment-generating industries like small-scale industries, promotion of labour-intensive techniques and encouragement to export-oriented units. There is a greater need to promote alternative livelihood opportunities in rural areas by developing tourism, handicrafts and other such activities. We need to invent or procure alternate sets of eco-friendly technologies that lead to sustainable development in different circumstances.

Also Read: NCERT Notes and Solutions Class 11 Political Science

Important Definitions in NCERT Notes Class 11 Indian Economic Development Chapter 6: Employment: Growth, Informalisation and other issues

This section lists key terms for clarity and revision:

• Worker: An individual engaged in any economic activity contributing to the gross national product, including self-employed, casual wage labourers, and regular salaried employees.
• Worker-Population Ratio: The proportion of the population actively engaged in productive work, calculated as (number of workers/population) × 100.
• Self-Employed: Workers who own and operate enterprises for their livelihood.
• Casual Wage Labourers: Workers engaged irregularly and paid daily wages without job security.
• Regular Salaried Employees: Workers hired on a permanent basis with fixed wages and benefits.
• Informalisation: The trend where a larger proportion of the workforce shifts to the informal sector, lacking job security and social benefits.
• Jobless Growth: A situation where GDP grows without a corresponding increase in employment opportunities.
• Unemployment: A condition where people willing and able to work cannot find jobs at prevailing wages.

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